THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CANDY CROWLEY, HOST: This week, tens of thousands of leaked documents. The short version? The U.S. is in a dogfight with the Taliban. In the nine years since the war in Afghanistan began, June was the deadliest month until July. Sixty-six U.S. servicemen and women were killed in July, bringing this year's total to 267.

There is growing fear, particularly in the Democratic Party, that the war is no longer worth its deadly price. The House recently passed a measure to continue paying for the U.S. effort in Iraq and Afghanistan, but there is a story in the yeas and nays. Last year, on a similar funding measure, 221 Democrats voted yes, 32 no. But this year, 70 Democrats switched their vote from yes to no. Just 148 of them voted to fund the wars; 102 said nay.

(BEGIN VIDEO CLIP)

REP. JIM MCGOVERN (D), MASSACHUSETTS: It seems to me that it's inappropriate for us to vote yes on a blank check.

REP. LYNN WOOLSEY (D), CALIFORNIA: The Afghanistan government is failing to have any competency.

REP. DAVID OBEY (D), WISCONSIN: I cannot look my constituents in the eye and say that this operation will hurt our enemies more than it hurts us, and so I will reluctantly vote no.

(END VIDEO CLIP)

CROWLEY: Most Republicans support the war, most Americans do not. And it is hard to wage war if the country turns against it.

(BEGIN VIDEOTAPE)

CROWLEY: Today, the deadliest month in the longest war. Afghanistan, with the chairman of the Senate Armed Services Committee, Democrat Carl Levin.

LEVIN: It's not just our mission. It's their mission, which we're helping them to succeed with.

CROWLEY: And a Republican member of the Armed Services Committee, Lindsey Graham.

GRAHAM: To lose there would be disastrous. To win there would be monumental. CROWLEY: And then politics, with Peter Baker of the New York Times, and Dan Balz of the Washington Post. I am Candy Crowley, and this is State of the Union.

(END VIDEO CLIP)

CROWLEY: While Democrats struggle to find a single voice on Afghanistan, the American public is finding its own. A recent CBS poll asked how are things going in Afghanistan. Only 31 percent said they thought things were going very well, or somewhat well. 62 percent said somewhat badly or badly.

Testifying before the Senate Armed Services Committee, the man nominated to be the new CENTCOM commander, General James Mattis, warned against an early exit.

(BEGIN VIDEO CLIP)

GEN. JAMES MATTIS, NOMINEE, U.S. CENTCOM COMMANDER: Sir, I have no reason for optimism, that if the Taliban were left in control that Al Qaida would not move back in. They did it before. I don't see any reason why we would expect them not to do it again.

(END VIDEO CLIP)

CROWLEY: The question is whether President Obama can keep the support of Congress for another year. Joining me now is the chairman of the Armed Services Committee, Senator Carl Levin of Michigan. Thank you, sir, for being here.

LEVIN: Good being with you, Candy.

CROWLEY: What is the message that 70 House Democrats from last year to this, have changed their minds about this war?

LEVIN: That the public support is not as great. But I think the public also does want us to succeed in Afghanistan. They have the impression that things are not going well now, at least the majority. But I think the public does want us to succeed and to--

CROWLEY: Is it more than an impression? I mean, are you saying it's an impression that it's not going well, but it actually is?

LEVIN: No, I think there's really signs of progress. It's a mixed picture. But the most important thing that is happening as far as I am concerned is that the Afghan army is well respected, is now going to be taking the lead. And these are very important words for the American public to understand, that in this effort that is going on right now near Kandahar, the so-called Arghandab Valley, that the Afghan troops are in the lead there. And when their own people see that, it is going to make a difference. And when the Taliban sees that they are not able now to just paint this as a foreign -- a lot of foreign troops present in Afghanistan, but now it's their own Afghan army, a popular, respected army, that they are taking on more and more during this next year, that that is going to make a difference. That's a real nightmare for the Taliban to be up against an Afghan-led effort.

CROWLEY: We may be reading different things, and you have been there and I want to ask you about your impressions from your latest visit there. But we read all the time that the Afghan army, and in particular the police force, you know, many times they go off on leave and they don't come back, that there are drug problems, that there are a lot of them that can't even read the manual for shooting for the rifles and the guns. So what are you seeing that is not kind of getting out? LEVIN: Well, what I see is a mixed picture with some signs of progress. What gets out is the negative picture, and almost exclusively, but actually there is some positive indicators, too. We have been doing a very good job, our special forces, of capturing Taliban leaders. You hear that there is a number, an increased number of American casualties, and there are an increased number of Afghan army casualties, and there are -- that's because--

CROWLEY: And there will continue to be increased numbers of U.S. casualties, correct?

LEVIN: And there will be, because there are more troops there, and we are taking the fight to the Taliban, right in the heart of the Taliban heartland.

It's a very important point, and it's been I think missed so far by the media, that where we are taking the extra casualties particularly is right down where the Taliban have had control. And we are removing Taliban control in the Kandahar area gradually, but it's being done as we speak now with the Afghan troops taking the major lead and with more Afghan troops finally than American troops there.

So this transition to Afghan control of their own destiny is gradually taking place.

CROWLEY: You sound a little more optimistic than I recall your being -- and maybe it's since your trip there and seeing things with General Petraeus. Do you sense that in the Senate, there is some similar slippage to that in the House of support for this war? Because you and I can both remember Vietnam and how difficult it is to wage war when you don't have the support of the American people, much less Congress?

LEVIN: Right. No, I don't see slippage in the Senate particularly. We had a vote on it, and there were I think five or 10 Democrats who voted no. But I think what people also -- it's really important that that July 2011 date where the president has ordered that we will begin to reduce the number of American troops. That date is very visible now. The American people understand it. It's critical that that date was set to show that it isn't a blank check, it's not an open-ended commitment of American troops in the same numbers that we're going to have there. We are going to begin to reduce our military presence. The pace will be determined by the conditions. But the beginning point is July of 2011, and the Afghan leaders know it. This has been a really strong message to the Afghan leaders that they must accept responsibility, major responsibility for their own security. CROWLEY: I want to play you a quick clip from the vice president, who was on ABC on July 11. When he was asked about how small a withdrawal it might be in -- come next summer -- oh, I'm sorry, we don't have the bite. Let me read it to you. He said, "It could be as few as a couple thousand troops." Is that sufficient enough to keep support?

LEVIN: I think what's key to keep support is that people know that that July 2011 date was not only set by the president to begin reductions, but that our top military leaders, including General Petraeus and including Secretary Gates, support the setting of that date to begin reductions. I think it would be impossible to determine what the pace of the reductions should be, so I think it's proper for the vice president to say that we just don't know the pace.

CROWLEY: I want to turn you to WikiLeaks, which also comes under your bailiwick to a certain extent. Some 90,000 documents with secret information or top secret information. Can you quantify the damage?

LEVIN: Not yet. I think that's being assessed right now as to how many sources of information that gave us information that was useful to us are now in jeopardy. That -- that determination and damage assessment is being made right now by the Pentagon. But there quite clearly was damage.

CROWLEY: And do you think the Army is doing enough to kind of try and stop this thing, this kind of thing in the future?

LEVIN: I do. They are doing everything they can.

CROWLEY: OK. I want to turn you to politics, because you had the president in your state last Friday, actually, and I want to play something that he said while he was in Michigan.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: Now, this morning we learned that our economy grew by 2.4 percent in the second quarter of the year. So that means it's now been growing again for one full year. Our economy is growing again instead of shrinking.

(END VIDEO CLIP)

CROWLEY: OK, now I am going to put up for our audience a graph, and I know -- I know you know this, but in the fourth quarter of last year, economic growth was 5 percent. In the second quarter that just ended of this year, it's about half that, 2.4 percent. Isn't that economy, along with the 13 percent unemployment rate you have in Michigan, a difficult sell?

LEVIN: Yes, I think it's a real challenge. But the people see we are moving in the right direction and understand--

CROWLEY: Well, going from 5.0 growth last year to 2.4 percent now is the wrong direction. LEVIN: Yes. But in general, it's growth. And what this administration inherited was a huge ditch. And if the public I think senses, as they do, that the alternative to moving forward -- it may be sputtering, it may be up and down slightly, but it's still moving out of the ditch. If they understand, which I believe they really are sensing, that the alternative the Republicans have been offering is to repeal what we've done, to go back to Bush policies -- and if you asked the public what would you prefer, Bush economic policies or Obama economic policies, they take and prefer Obama economic policies.

LEVIN: So that is what the issue is going to be in November. You want to basically go back to what got us there in the ditch, or you want to move forward, even though it's not a straight line, at least it's a forward line moving forward.

CROWLEY: You are a Democrat, and I know the president is party leader, but I want you to try and answer this as diplomatically but as honestly as you can. Are there places in Michigan that the president of the United States would hurt the Democratic candidate more than help?

LEVIN: Well, there's places where he lost, if that is what you're asking.

(CROSSTALK)

CROWLEY: Well, let me ask you, like, first district. Bart Stupak's old district, he's a Democrat, but it's a very conservative area. To go in now and support the Democratic candidate, the president went in, would that hurt him?

LEVIN: I think it always helps for the president to be in a place. But the president lost many places in Michigan, like he lost many states and he lost many places otherwise. So it is always going to be a mixed picture politically, but I would say most places would welcome the president, even though they may not vote Democratic. They respect the presidency and I think they also understand that he is kind of fighting for them. When you compare the president's numbers on -- with Republican alternatives, who is fighting for you, who is on your side, the president and Democrats win that polling every time.

CROWLEY: And last question, has to be sort of a quick answer. How many seats do you think you will lose in the Senate this year?

LEVIN: I would not be able to predict now, because things change very, very quickly in politics.

CROWLEY: Expecting a loss?

LEVIN: I think it is likely off-season, off -- election year -- election, we're going to lose a couple of seats, but I think it's going to be a lot better than what people now look at, for the reason we just talked about.

CROWLEY: OK, Senator Carl Levin from my home state of Michigan, thanks for joining us. LEVIN: Thanks. CROWLEY: Next, the Republican senator who is taking flack from some in his own party for working with President Obama and the Democrats.

(COMMERCIAL BREAK)

CROWLEY: Senator Lindsey Graham is from South Carolina, one of the most conservative states in the country. He scores an 88 on a scale of 100 from a leading conservative group. He is also one of a handful of Republicans who have worked periodically with Democrats on major issues. Graham has been at the Obama White House some 20 times, and it has cost him. Glenn Beck calls Graham "Obama lite."

Graham supports a secure border, but also bucked party orthodoxy supporting a path to citizenship for illegal immigrants already here. Rush Limbaugh labeled him Senator Gramnesty. Though he eventually walked away from the table, Graham teamed up with Democratic John Kerry and independent Joe Lieberman to put together climate legislation, and he was the lone Republican on the Senate Judiciary Committee to vote to confirm President Obama's two nominations for the Supreme Court. Limbaugh theorizes Graham has been trying to make up for having been a manager on the Clinton impeachment bill.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, TALK SHOW HOST: He is groveling, he's hoping they will forgive him. They never will, but this is what happens to you when you leave your integrity at the cloak check.

(END VIDEO CLIP)

CROWLEY: When we come back, a conversation with Senator Lindsey Graham in his office.

(COMMERCIAL BREAK)

CROWLEY: Senator Graham, thank you so much for joining us here on State of the Union.

Let me talk about Afghanistan. We have heard so much about this June 2011 date, which now seems to be, well, maybe that's the time that we should have things turned around. In all honesty, could we turn things around in Afghanistan by June of 2011?

GRAHAM: Not country wide. If the president has a goal of transitioning to Afghan control in certain areas of Afghanistan by next summer, there is probably some areas that you can actually do that. We would be in a support role. The Afghan security forces would be in the lead role. But generally speaking, this time next summer, we are still going to be engaged in one hell of a fight. We're going to need every troop we have today I think still in Afghanistan next year. But if the goal is to transition in certain areas based on conditions, I share that goal. If the policy is going to be we're going to withdraw no matter what next summer, we're going to lose.

CROWLEY: Do you think that -- can you envision a circumstance under which more troops might be needed?

GRAHAM: Yes, I can. I mean, if we get the enemy on the run and they are having safe havens, let's say down in Kandahar -- that's really where the center of gravity is -- there is a lot of open terrain down there. And if we begin to clear the city and our intelligence says they are going out in the hinterlands and they are regrouping, we may need more troops to keep them on the run.

But I'll say this, if by December, we are not showing some progress, we're in trouble. And the question is, what is progress? Without some benchmarks and measurements, it's going to be hard to sell to the American people a continued involvement in Afghanistan.

CROWLEY: Well, on that score, we have seen dozens of House members who first voted for funding for the war in Afghanistan who have now turned against it. It was an easy vote in the sense that there were enough to pass the money bill.

GRAHAM: Sure.

CROWLEY: But do you think this administration has the stomach for the kind of fatalities that we are beginning to see and should see, told we should see more of, the money it is going to cost -- and you know, I hate to get into poll numbers where there is something this important, but he's losing his base on this?

GRAHAM: You know what I am most worried about? An unholy alliance between the right and the left. There are some Republicans who are not going to take a, you know, do-or-die attitude for Obama's war. There are some Republicans that want to make this Obama's war. You saw some Michael Steele's comments.

GRAHAM: There will be some Republicans saying you can't win because of the July 2011 withdrawal date, he's made it impossible for us to win, so why should we throw good money after bad, why should any more lives be lost in a hopeless cause because Obama screwed it up? You got people on the left who are mad with the president because he is doing exactly what Bush did and we are in a war we can't win.

My concern is that for different reasons, they join forces, and we lose the ability to hold this thing together.

Do I think the president has the stomach for it? Yes, I do. Do I think the president understands the consequences of losing? Yes, I do. He has got a political problem, but we have got a national security problem. How do you win in Pakistan if you lose in Afghanistan? And I asked the president that. How we can be successful in Pakistan, protect that regime from extremists if all goes to hell in Afghanistan? So I do worry about an unholy alliance with the right and left coming together next summer if we're not showing progress, to basically defund this war.

CROWLEY: Give me your best guess. How long will U.S. troops be in Afghanistan?

GRAHAM: Let me -- maybe the better question, and I don't mean to be presumptuous here, how much longer will we suffer a lot of casualties?

CROWLEY: OK.

GRAHAM: That's what people care about. We have been in Korea for, you know, since the end of the Korean War. We've been in Europe since World War II, nobody cares. They do care when Americans die.

Here is what awaits us. We are going to lose more troops in the foreseeable future. Casualty rates are going to go up each month. The cost of the war is going to increase. It's going to get worse before it gets better.

I hope by next summer, that we can show progress in Kandahar, that we not only cleaned and cleared Kandahar, but we have got some governance in place that we never had before.

They don't want -- the Afghan people -- the Taliban to come back, but they don't want to be left in a lurch. They don't know what to do right now. They're not sure about our commitment. They're not sure we can beat the Taliban. They'd like us to beat them. So next summer hopefully we can show that Kandahar has changed, that we have got better governance, and the Taliban has been cleared and the city is on its road to recovery

CROWLEY: When you look at Afghanistan, we went in there to get Al Qaida. Now we are in there building governance, all that kind of stuff. Is that the proper role?

GRAHAM: I think what we understand -- Afghanistan is one battle in a long series of battles. Some of these battles are ideological, where aid will turn the tide. Sometimes you have to use military force. Stabilizing Afghanistan would be a monumental blow to Al Qaida and to the extremists called the Taliban.

The war is not over. It's moving into Somalia and to Yemen. We are going to be fighting these people probably for the rest of my life, but we won't have to use 150,000 troops in every engagement. But if they beat us in Afghanistan, if the Taliban capture or regain control of part of Afghanistan, it is going to make it hard in Yemen to get people to help us because the ones who chose to help us in Afghanistan are going to meet a very unseemly, bad fate.

So what I try to tell my colleagues, people back in South Carolina -- I know you are tired, I know you are weary, but nobody is more tired than the people fighting the war. Why do these young men and women go back four times? They tell me they would rather fight them than have their kids fight them.

Afghanistan is a work in progress. To lose there would be disastrous. To win there would be monumental. And I think we have got a good chance of winning, but by no means is the outcome certain.

CROWLEY: Let me ask you about the leaking of thousands of --

GRAHAM: 91,000. CROWLEY: -- pages of documents. I know you have called for the prosecution of not just of who leaked it, but also of the website itself. What if it turns out that the person who leaked it was a military person?

GRAHAM: They should be court-martialed. And here is why I believe that. The 91,000 -- one, who the hell is watching 91,000 documents and let them get -- hey, where did those 91,000 documents go? We have got a serious security problem.

The documents themselves I think have put at risk people who have chosen to help us in different regions in Afghanistan. This makes prosecuting the war much more difficult. And the crime that needs to be punished here is undercutting those who are in the fight, because what you have done by linking (ph) this information, you may have a noble reason in your mind, in your heart, but you have put at risk people within Afghanistan who are trying to make things better for their family and for their country and you made it harder on our troops to win. So if that's not something worthy of prosecution, I don't know what would be. CROWLEY: One of the things that came out of it -- so set aside that it was leaked -- one of the things that came out of it was that the Pakistan military spy service is helping the Afghan insurgency. This is a country, this is a government -- an arm of the Pakistani government, and we give them $1 billion a year. And people are going, wait a second. They are training people to come fight us, and we're giving them money.

GRAHAM: Well, they're doing a couple of things, some good, some bad. Put yourself in the shoes of Pakistan. You hear this talk about America may be leaving next year. How much do you hedge your bets? It makes perfect sense to me that if people think we are going to leave and the Taliban may reemerge, that they are going to hedge their bets.

Things generally are the best they have been with Pakistan in a long time. And this is one area where President Obama doesn't get enough credit. His team, in my view, have brought out the Pakistanis into the fight better than anybody in recent memory. They are cooperating with us more, they are allowing us to use these drone attacks. We are punishing the Haqqani network and Al Qaida that's hiding in Pakistan. The aid packages that we have given to the Pakistani army have been well used. General Kayani has been a good partner in taking the fight to the frontier regions. So I would say that the Obama administration has done a very good job of taking the fight to the enemy in Pakistan and trying to bolster the Pakistanis' capability to take the fight to the enemy.

CROWLEY: Senator Graham is going to stick with us. We'll be right back after a quick break.

(COMMERCIAL BREAK)

CROWLEY: We're back with Senator Lindsey Graham of South Carolina.

Let me ask you, there has been a lot of talk, and certainly the Democrats have said this is the party of no. But the truth is there have been a lot of things that the Republicans have said no to.

GRAHAM: Right.

CROWLEY: Is that enough to have a good election in the midterm?

GRAHAM: Well, it's kind of odd that the things that we say no to are the same people -- the American people don't like. You know, the American people are not sold on the health care bill. They've tried to sell it, they can't sell it. The American people believe the stimulus package has been a flop. I believe it has been a flop.

GRAHAM: But the idea of us fighting the Democratic agenda when it's bad makes sense, but we have to do more than say no. You're right.

What are we for as a party?

Now, we've been in power where we had 55 senators and we had a Republican president. You can look back and say we were not the -- the best stewards of government spending.

I think what we need to go forward as a party is an agenda that gives us resonance with a broader group of people. What are we going to do, if we get the Congress back, on spending?

So I would suggest to my colleagues in the House and the Senate that we come up with a common agenda for both bodies to say, if you give us power back, not only will we check the Obama administration; we'll try to turn the country around.

CROWLEY: You once said that -- that Ronald Reagan wouldn't recognize this party, that this -- that the Republican Party has gone too far to the right. You have said things about the Tea Party. You think that they will not last long.

Are you comfortable in the Republican Party?

GRAHAM: Yes, I'm very comfortable. And I'm comfortable with the Tea Party being a -- a strong force in American politics. What I'm not comfortable with is saying -- pointing out problems without solutions.

Now, the Tea Party -- what I said to the reporter was that the Tea Party is expressing anger that a lot of average Americans feel. We're spending way too much money. We've lost our way. It really was started as a reaction to overspending.

There are some signs in these rallies that I think disturb up a lot of Americans, but I'm not going to label the whole group by that.

What I worry about is that the public is rightfully upset about their Congress not delivering, but when we try, you know, groups on the left and the right just yell and scream.

So what I want to do is make sure that we can find a way to move forward. The current status quo is unacceptable. Be mad; get involved; insist that the Congress act better. But to me, the only way we can move the country forward is to find common ground on these big-ticket items. And I hope that people in the country will start rewarding that more instead of punishing it.

CROWLEY: The ruling on the Arizona law -- does that speed up a possible federal -- some sort of bill that deals with immigration, or does it slow it down?

GRAHAM: Let me tell you what the Arizona debate has done, is reenergized interest about fixing immigration. The people in Arizona are being overrun. The border is broken. They're dealing with illegal immigration unlike people in South Carolina.

So they decided to pass a law that would allow the help the federal government. The law in Arizona basically was an effort by the people of Arizona to say, we want to be your partner; we're going to use our cops to find people who are here illegally and we're going to turn them over to you, federal government.

Well, the federal government said, we don't want your help. And the judge said, hey, the federal government, you can say no if you'd like. But it's an act of frustration. They were trying to create a partnership the federal government didn't want.

What I want to do is try to find a way forward here in Congress. Because the Arizona law has hit a legal wall now. It's going to be very difficult, I think, to sustain this law on appeal now that the judge has ruled the way she's done.

So we're three years out from the last attempt to solve immigration. Everything has gotten worse. Nothing has gotten better. So I hope next year we can find a way to start with border security, sit down as Republicans and Democrats and acknowledge the obvious.

We need a temporary worker program because people come here to get jobs. The American people are looking for a solution that makes sense. Let's secure the border.

I'm willing, Candy, to have every American take their Social Security card and turn it into a biometric document; put your ID on there, a fingerprint, so when you go get a job or I go get a job, we can present a Social Security card to our employer and they can verify we are who we say we are.

If we all agree to do that as a people, you wouldn't have to look at somebody based on their accent or their background. You would have a document that's trustworthy and verifiable. I can get you a fake Social Security by midnight.

I am willing to do the hard things. I'm willing to push my party, but at the end of the day, the Democratic Party has to be willing to push their base.

And to the American people, immigration is broken and will never be fixed until we change our laws. Our laws are broken. If you want to fix immigration, allow Republicans and Democrats to get in a room and do some good old-fashioned horse trading to -- to get this thing fixed. If we keep yelling at each other; if we keep just saying no to each other's idea, we're going to have one thing in common: we're going nowhere together.

CROWLEY: Senator Lindsay Graham, thank you so much for joining us.

GRAHAM: Thank you.

CROWLEY: We'll be right back.

(COMMERCIAL BREAK)

CROWLEY: A court ruling temporarily barring implementation of controversial provisions in Arizona's immigration law kept the issue in the headlines and politicos guessing the impact in November.

Hispanic-Americans are the fastest-growing voting bloc in the country, and they are largely against Arizona's stiff crackdown on illegals. But a research fellow at a conservative Washington think tank predicts what the administration won in court will backfire at the ballot box.

The administration is on something of a losing side of this. There's a real possibility that they will motivate more voters who are worried about immigration than they are likely to get a huge turnout of the Hispanic vote.

But a Democratic organizer argued recently that the battle will turn Hispanic voters away from the Republican Party for years to come. "The position a candidate takes on the Arizona lawsuit appears to affect the voting decisions of only one group, Latino voters. For fear of offending the emergent Tea Party and other anti-immigrant zealots in their own base, they are precipitating a massive realignment of Latino voters nationwide."

We will talk about the politics of immigration with Peter Baker of the New York Times and Dan Balz of The Washington Post when we come back.

(COMMERCIAL BREAK)

CROWLEY: Joining me now here in Washington, Peter Baker, White House correspondent for the New York Times, and Dan Balz, national political reporter for the Washington Post.

Thank you all for being here. Let me start out with the immigration issue, because it has been a couple weeks now in the headlines. How does it cut politically?

BAKER: Well, this is one of these complicated issues that cuts in lots of different ways and lots of different places, right? The lawsuit this week that the government filed, President Obama's administration filed against the Arizona law, tossed out or at least temporarily stopped some of the most important elements of that law. It inflames the conservatives, obviously, who are upset about immigration, but it also, you know, has the effect of the Hispanic base, giving them a reason to turn out for the Democratic Party. So I think it's one of these things where it depends on the district you're in, it depends on the state you're in on how it ends up affecting elections.

CROWLEY: Because it does seem you could -- I mean, it sort of -- kind of turns out everybody's base, in some ways. It will push Latino voters -- at least Democrats think -- to the polls, and it will -- the more conservatives on the Republican side, the Tea Party and others, it will push them to the polls.

BALZ: Peter's right, although I think that the question this fall is -- is likely to be that it's going to give more energy to the right than to the left or to -- to -- and to the Hispanic base.

I think that, in the short term, this is helpful to Republicans and conservatives in getting people -- even more people out in the fall. Over the long term, obviously, Republicans have a greater risk at losing the Latino vote for -- you know, for the foreseeable future.

CROWLEY: Let me -- let me turn you to ethics, simply because -- and -- and remind you a little bit of what Nancy Pelosi had to say. This was January 12th of 2008? 2008, I think, as they were beginning to take over on the House side. Take a listen.

(BEGIN VIDEO CLIP)

PELOSI: We have a responsibility to the American people, those of us who serve here, to do a much better job of cleaning house, draining the swamp.

(END VIDEO CLIP)

CROWLEY: 2006.

BAKER: Right.

CROWLEY: Becoming speaker. And it was the ethics and the Republicans were terrible. And now what do we have? We have two of the most senior Democrats on the House side in trouble with the Ethics Committee, neither convicted of anything yet, but Charlie Rangel, Maxine Waters. How does this play -- I know, Dan, you wrote a column about this that was interesting. How do you see this playing?

BALZ: Well, in two ways, Candy. One is, I think it's kind of a nightmare scenario for the Democrats. For all of this to come forward at this moment, just on the eve of the midterm elections is the worst possible time to have a public trial for somebody as prominent as Charlie Rangel.

And the possibility now of Maxine Waters also having a public trial before the Ethics Committee just heightens, you know, the concern that people will have about, what are the Democrats up to? I think more broadly, it is -- it is another reason why the congressional approval rating in the Gallup poll is at 11 percent. I mean, this is the kind of behavior -- now, granted, these people have not been convicted of anything, but the charges are very, very serious, particularly the charges on Charlie Rangel. And so that makes a big difference in the way people perceive the institution.

CROWLEY: Peter, since you're at the White House -- and I know you've heard this, but I want to play for our audience something that the president had to say about the Rangel case.

(BEGIN VIDEO CLIP)

OBAMA: I think Charlie Rangel served a very long time and served his constituents very well, but these allegations are very troubling. And, you know, he's somebody who's at the end of his career, 80 years old. I'm sure that what he wants is to be able to end his career with dignity, and my hope is, is that happens.

(END VIDEO CLIP)

CROWLEY: OK, well, I'm sort of thinking, an image of throwing somebody under the bus sort of comes to mind.

BAKER: Yes, right.

CROWLEY: I mean, this was as good a push as Rangel has gotten since Nancy Pelosi said let the chips fall where they may.

BAKER: Right, exactly. End your career with dignity. It's a not-very-subtle message to put this behind us, have a settlement. The committee that investigated him is only recommending a reprimand, not expulsion from the House. So, you know, a lot of people have served in the House of Representatives after a reprimand quite well, including Barney Frank. Newt Gingrich was reprimanded. So, you know, the clear message from the president is, get this behind us, have some dignity.

The other thing that was interesting to watch in that particular clip is, remember, he came to office as a reformer. He also, like Nancy Pelosi, had promised to drain the swamp. He was going to bring a new tone to Washington.

And instead, what's happening is he finds himself a party leader, trying to minimize this. He's -- "Charlie Rangel served well." He's not expressing outrage that somehow, you know, Washington has not been fixed. He's trying to minimize the damage.

CROWLEY: Right, which is the role of -- if it's your guy being attacked or somebody, the other party's guy, I guess. Why doesn't Rangel -- I mean, and you're right. Reprimands are not -- I mean, it's a big deal, but it's not a career-ender. What's going on?

BALZ: Well, he's a very proud man. He's served a very long time. He thinks some of these charges are bogus, and he wants to fight. I mean, he's a fighter. Like many politicians, when they're -- you know, when they're cornered, they fight. They don't give up. And so it's a natural instinct on the part of somebody who has been through as much as he has been through to fight to the end.

CROWLEY: Which a little bit makes me think of the president might not have wanted to have said that, because I could see Rangel coming back and going, "Oh, yes? Well, no."

BAKER: Yes, right.

CROWLEY: Let me turn to the war in Afghanistan. We know 70 Democrats who voted yes last year to funding voted no this year. Senator Levin says that there's not a similar fall of support on the Senate side. We'll see. What -- how big a role -- I mean, you know, the war was everything in 2006. What is it now?

BAKER: It's not the same. And that is interesting, because 2006, 2007, everything was about Iraq, and President Obama in some ways, as a matter of politics, is lucky that Afghanistan hasn't taken on that role. Now, that's also bad news for him, because it means the economy is so bad that that's where the public is still focused. And if the economy were better, they might be focusing on the losses we've taken in Afghanistan and whether this strategy really is the right one to lead to the outcome that he's saying he wants.

But you're going to see him talk a lot more about the wars, both wars, over the next month, because Iraq, we're about to see a transition there...

CROWLEY: Going to pull out, yes. BAKER: ... right, we leave 50,000 behind, but on Monday, he'll speak in Atlanta to a veterans group. You'll start hearing him talk about the wars a little bit more. Some people want him to talk a little bit more about the wars to build up a little more public support, explain to the public what he's trying to achieve so you don't see the slip, as you talk about.

CROWLEY: Dan, you know, when we look at it, here's a Democratic Party coming up on elections where there's a war going on, even if there is a war winding down, where the economy just truly -- doesn't even -- they can't even say it's marching up, because it's beginning to kind of slip down a little bit.

Assuming that the economy is -- and I think most people do -- the driving force in this election, what do you predict is up next for Democrats? What do you think is going to happen on Election Day?

BALZ: Well, they're going to lose a lot of seats, I think. And I think everybody agrees with that. You know, there are certainly enough seats in play that the Republicans could take over the House. There are enough seats in play in the Senate -- or at this point, seem to be -- that if they ran the table and got everything, they could take over the Senate.

That's not necessarily probable at this point. And I think a lot of the expert handicappers still are below the level of the Republicans taking over. To win 39 seats is a major, major accomplishment, which is what the Republicans need. There are not that many elections we've seen since World War II in which one party has won that many seats, so they've got a very high bar.

But there's no question that the whole environment is bad for the Democrats, and they're going to take a significant loss, and we're going to have a totally different kind of Congress next year and a relationship between the White House and Congress.

CROWLEY: And what does that relationship become?

BAKER: Well, even if they hold on to -- even if Democrats hold on to the Congress, it's not going to be one that's going to be as susceptible to President Obama's legislative agenda. Look how hard it's been for him to get some of the things through, even with a Congress in solid Democratic hands.

Imagine a Senate with only 52 Democrats, let's say, even if they hold on, or a House with just a 5- or 10-seat majority. Every vote becomes that much harder, scrapping for any kind of deal-making and so forth, which has turned off the public. So it's not a good picture for him either -- either scenario, actually.

CROWLEY: But the good news for him may be that in -- if that happens, in 2012, he has someone to run against.

BAKER: Well, that's right, exactly. Arguably, it might be better for him if the Republicans won, because then he'd have a foil for the next two years.

CROWLEY: Next up, a check of the top stories and then a new chapter for the man whose story was portrayed in the movie "The Soloist."

(COMMERCIAL BREAK)

CROWLEY: Time for a check of today's top stories.

New documents released by Congress indicate the Coast Guard allowed BP to use excessive amounts of chemical dispersants in the Gulf of Mexico, despite a federal directive restricting their use. BP used the dispersants to break up the oil that gushed from the damaged underwater well.

Iran wants three Americans who have been detained for the past year to stand trial on charges of illegally crossing the country's borders, according to the Associated Press. The U.S. government says the Americans are innocent and accidentally crossed Iran's border while hiking in northern Iraq. Pakistani government officials tell CNN the death toll from recent floods is now over 1,000 people. Floodwaters have stranded another 30,000 on rooftops and other high places. Rescue and recovery efforts are underway, but they have been hampered by damaged roads and bridges.

In Iraq, new government figures show July was the deadliest month in more than two years: 535 Iraqis were killed, over 1,000 were wounded, heightening concerns about the country's security. The violence comes as Iraq struggles to form a new government nearly five months after disputed parliamentary elections.

The chairman of the Senate Foreign Relations Committee, John Kerry, says he thinks the U.S. should engage Iran in order to improve the situation in Afghanistan. Speaking to CNN's Fareed Zakaria, Kerry says it would be a way to open a dialogue on other issues, as well.

(BEGIN VIDEO CLIP)

KERRY: I think we should also engage China, Russia, and I would say to you that the possibility could exist even of Iran playing a role in helping to change the equation on the ground.

ZAKARIA: And you would talk to Iran about that?

KERRY: Absolutely. You bet I would. I think it -- it could become a way even to get in on the other issues of concern to us, not just nuclear, but the whole regional issue.

(END VIDEO CLIP) CROWLEY: You can see Fareed's entire interview with Senator Kerry at the top of the hour.

A big day for Chelsea Clinton. The former first daughter married her long-time beau Marc Mezvinsky yesterday in Rhinebeck, New York. The bride wore a wedding gown designed by Vera Wang.

Those are your top stories here on "State of the Union." Up next, from skid row to the White House, Mr. Ayers goes to Washington.

(COMMERCIAL BREAK)

CROWLEY: And finally, a postscript to a story made famous in the movie "The Soloist."

(BEGIN VIDEO CLIP)

DOWNEY, JR.: You've only got two strings.

FOXX: All I want to do is play music.

CROWLEY (voice-over): Nathaniel Ayers, a one-time child prodigy who dropped out of the Juilliard School and was a homeless schizophrenic and later landed on the dangerous streets of skid row in Los Angeles, and that is where L.A. Times columnist Steve Lopez met Nathaniel Ayers.

FOXX: (inaudible)

DOWNEY, JR.: Me, too.

CROWLEY: It became a deep, but difficult friendship. This week, Ayers was part of a White House program marking the 20th anniversary of the Americans with Disabilities Act, barring discrimination against people with mental and physical disabilities.

Ayers, who wore white -- he explained later it's because it's the White House -- wanted Lopez to be in the audience. Lopez later wrote in his column, "I had misgivings about the trip. He is still at the mercy of storms."

Lopez continues, "Mr. Ayers couldn't seem to get his fiddle tuned. And as the moments dragged on, it was unclear whether he would proceed. Mr. Russo on piano, and the audience waited patiently. I, meanwhile, was practically hyperventilating and pulling for my friend."

Finally, he found a groove, and the audience swayed, Mr. Ayers lifting spirits with his music, although he would later say it wasn't one of his best performances.

(UNKNOWN): Can't win them all.

CROWLEY: Lopez's column concluded, "Mr. Ayers' very presence was a triumph his audience understood and applauded. He struggled, said Russo, but he soldiered on." Lopez wrote that when they got back to Los Angeles, Ayers asked him, "Do you think we could go to Rome and meet the pope?"

Thank you for watching "State of the Union." I'm Candy Crowley in Washington. For our international viewers, "World Report" is next. For everyone else, "Fareed Zakaria GPS" starts right now.